Should I do owner-builder work?

An owner-builder permit is designed to allow people who have the skill or capacity to build their own house or supervise construction by coordinating appropriate sub-contractors. While an owner-builder permit is not a builder’s licence, as an owner-builder, you are responsible for the building work as a fully licensed builder would be.

Taking out an owner-builder permit significantly impacts on you as the property owner and permit holder. Under the permit, you become ultimately responsible for managing and coordinating the completion of the building work. You must still engage licensed contractors to complete any specialist work related to the construction. For any other work, you must ensure the tradesperson is appropriately licensed for the scope of work needed. Learn more regarding different tradespeople at our Licence classes and qualifications web page.

If you don’t want this responsibility, be wary of a builder who suggests you obtain an owner-builder permit while they do all the building work for you. This may be a ploy where the builder is shirking responsibility, is unlicensed, or is unable to get necessary insurance.

WARNING! As an owner-builder you are guaranteeing the work you undertake. The next immediate owner of the property is entitled to the benefit of the statutory warranties set out in the Home Building Act 1989.

What are my responsibilities?

ensuring that the financial, taxation and insurance requirements of the building work are met and fully comply with all laws

being aware of your obligations under the Workers Compensation Act 1987 and the Work Health and Safety Act 2011 to provide a safe work environment that complies with SafeWork NSW requirements. Significant penalties may apply if you don’t meet this obligation. Our Dealing with hazardous materials web page has more information on some possible risks, such as asbestos and lead

ensuring any contractor engaged is appropriately licensed and insured to do the work contracted for

warranting that the materials and work will be fit for the purpose and result in a dwelling that can be occupied.

Do your sums before you start and ask if any saving you will make is worth the time and responsibility it will take. It is also encouraged that you discuss your situation, including obtaining funding for any owner-builder work, with a professional who can provide financial advice to best suit your circumstances.

It is an offence under the Home Building Act 1989 (maximum penalty $22,000) for the holder of an owner-builder permit to:

knowingly engage an unlicensed contractor

lend their permit to another person

refuse to disclose to an authorised officer the names and addresses of contractors working on the site.

evidence of ownership or a registered lease with Land and Property Information

development consent (development application (DA) approval or complying development certificate (CDC) approval) from a certifying authority (council or private certifier) for the subject building site

a current general construction induction training card (within the meaning of the Work Health and Safety Regulation 2011), also referred to as Safework Whitecard or a Safework Statement of Training

if the work is over $20,000 in value, evidence that you have met the owner-builder education requirement

all other owners of the land for which an owner-builder permit may apply must also be listed - these other owners will not be able to apply for another owner-builder permit relating to different land for 5 years.

For the current general construction induction training card (Item 3 above), Fair Trading will also accept a Safework Statement of Training, issued within the 60 days prior. This acknowledges that it may take up to 60 days to issue the general construction induction cards once you have completed the relevant training.

Fair Trading will also accept, in certain circumstances, interstate general construction induction training cards or cards issued in NSW under previous arrangements that are recognised under Work Health and Safety laws.

The following Fair Trading web pages provide more information regarding required units of competency for owner-builder education and if an applicant is eligible to be exempted from the education requirement:

Approvals needed for building work

Most building work needs the following approvals before work can start.

Development consent or Complying Development Certificate (CDC)

Your local council can issue development consent. If a CDC is permitted for the type of development you propose under the council’s local plan, it can be issued by your local council or an accredited certifier.

Construction approval

Approval for the work (a construction certificate) can be given by either your local council or an accredited certifier.

During construction, the building work must also be inspected by council or an accredited certifier to check that it meets national building standards (the Building Code of Australia).

A certificate to allow occupation or use of the completed building work (occupation certificate) can only be issued if the work generally meets these standards.

For more information about building work approvals and choosing a certifying authority visit our Consumer building guide web page to view or download our Consumer building guide.

You can also find out more about the approvals process and choosing a certifying authority from the Building Professionals Board at www.bpb.nsw.gov.au or by calling 9895 5950.

Use licensed tradespeople

Tradespeople (whether contracting directly with home owners or sub-contracted through a builder), who do home building work costing over $5,000 (labour and materials), must hold a Fair Trading licence for the type of work they are to do. Regardless of the work's cost, specialist tradespeople must be licensed for doing:

electrical wiring

plumbing, draining and gasfitting work

airconditioning and refrigeration work (except plug-in appliances).

Before you sign any contract, don't forget to:

ask to see a tradesperson's licence

use the licence check on the Fair Trading website to make sure it is current, valid and suitable for the work you want done, or call Fair Trading and do a licence check over the phone.

Contracts

Cover under the Home Building Compensation Scheme

Does the total contract sum exceed $20,000 (including material supplied by the contractor)? If so, each licensed contractor (builder or tradesperson) who contracts directly with an owner-builder to do residential building work must provide cover under the Home Building Compensation Scheme (previously called Home Warranty Insurance) from an approved insurance provider.

You as the owner-builder should receive proof of the cover before:

work starts

you pay any money.

Homeowners can confirm the validity of their Home Building Compensation Scheme cover, including any previous claims on the policy through the HBC Check at www.sira.nsw.gov.au.

Selling an owner-builder built home

Cover under the Home Building Compensation Scheme is no longer available for owner-builder work done by an owner-builder. Should an owner-builder or a successor in title to that person decide to sell their home within 7 years and 6 months after an owner-builder permit was issued, the contract for sale must include a note (a consumer warning) stating that: an owner-builder permit was issued in relation to the land on the date it was issued.

Work done under an owner-builder permit is not required to be insured under the Home Building Act 1989 unless the work done by a contractor to the owner-builder is worth more than $20,000.

If the consumer warning is not included in the contract of sale, the purchaser can void the sale contract before settlement.

WARNING! As an owner-builder you are guaranteeing the work you undertake. The next immediate owner of the property is entitled to the benefit of the statutory warranties set out in the Home Building Act 1989, and can take you, the owner-builder, to the NSW Civil and Administrative Tribunal to enforce their statutory warranty rights. This may result in a money order against you.

Other insurances

Consider other insurances you may need as follows.

Workers compensation insurance

Owner-builders should ensure they are aware of any workers compensation insurance requirements that may apply to them when they engage contractors to carry out work. Depending on the arrangements in place, contractors engaged by an owner-builder could be deemed to be a worker. It is important to make sure the owner-builder and all contractors have a clear understanding as to how any accidents that may arise will be covered.

For more information about workers compensation insurance, contact icare at www.icare.nsw.gov.au or call 13 44 22.

Contract works insurance

This insurance should be obtained by builders and trade contractors. It is for your protection and covers loss or damage to materials and work. If the builder or trade contractor does not have this type of insurance, you may risk inconvenience, time delays and disputes if materials are damaged or stolen.

Public liability insurance

If you intend to be an owner-builder or to contract out any type of building work (for which you remain responsible for coordinating), it is strongly recommended that you take out a public liability insurance policy.

This covers you if a family member or member of the public is injured as a result of the building work. You could be liable because you own the property.

False or misleading information with your application

You may be prosecuted under the following sections of the Crimes Act 1900 if you falsely state or leave out information in an application for an owner-builder permit:

under s.307A of the Crimes Act 1900 a person is guilty of an offence if she/he makes a false or misleading statement in an application for an authority or benefit. The penalty for false or misleading application is imprisonment for 2 years, or a fine of $22,000 or both

under s.43(1) of the Home Building Act 1989 the Commissioner may cancel a permit if it is later discovered that a permit holder misrepresented information in their permit application.